What is Fractional Trading?

What is Fractional Trading?

Fractional shares enable investors to buy and sell in quantities less than one share.

Fractional Share Trading allows for purchasing portions of an individual stock or ETF share, rather then buying a whole share outright. This method makes investing in high-priced securities more accessible and affordable. With fractional shares, you can also make investment decisions using dollar amounts, and receive the corresponding shares, calculated up to 5 decimal places.

Why buy fractional shares?

For greater diversification opportunities

Diversification is a common financial strategy designed to minimize portfolio risk by spreading your investments across various asset types and sectors. Fractional trading can aid in building a diversified portfolio because it enables investors with limited capital to purchase less than one whole share. Securities that otherwise trade for hundreds of dollars can be included in your portfolio for as little as $1, creating more opportunities for exposure into various sectors and asset types.

To make investment decisions in notional amounts

Notional trading is an alternative to placing an order for a specific amount of shares. Instead, investors can specify a dollar amount to invest, and receive the corresponding share amount after execution. Previously, an investor with $150 would only be able to purchase one share of a security trading at $100, with $50 leftover as idle cash. With fractional trading, the entire $150 can be invested for 1.5 shares of the security, maximizing the investor's available cash.

Webull offers fractional shares for most Stocks and ETFs that are available on our platform. Click Here to see how to trade fractional shares.

Trading fractional shares

Fractional share trading gives investors the ability to purchase an equity position with a quantity of less than one share, or input quantities using dollar amounts.

1. Pick a stock or ETF that is available for fractional share trading. A green diamond on the stock details page denoted fractional trading availability.
2. Tap the ‘Trade’ button.
3. Select your desired order type. Limit orders must be submitted using share amounts. Market orders can be submitted using dollar or share amounts.
4. Tap the ‘Share’ button if you’d like to enter the quantity in a dollar amount.
5. Submit your order.
   

Things to know about fractional shares

1. Fractional share trading is only available on our mobile app, and you will need to be on the latest version to be able to use the most updated functions. Will need to change this if we decide to remove Apex frac trading from old versions.
2. Short selling is not supported with fractional shares.
3. Once a fractional trade has been submitted, order modifications are not available. If you’d like to make edits to a fractional order that is still pending, you can cancel your existing order and resubmit.
4. Fractional shares are not eligible for the Stock Lending Income Program.
5. Fractional trading is not included in the paper trading function.
6. Fractional shares cannot be accepted via account transfer.

Rules for Fractional Share Trading

Trading Hours:

Fractional share trading is only available during regular market hours (9:30am - 4:00pm EST).

Order Types:

You can trade fractional shares using both Market and Limit Orders. Limit orders must be submitted using share amounts. Market orders can be submitted using dollar or share amounts.

Order Amounts:

The minimum investment amount for a fractional share order is $1, or 0.00001 shares. The minimum sell amount for a fractional share is $0.01, and the number of shares must be greater than 0.00001.

Day Trading:

Fractional share trading is subject to the same day-trading standards as whole share trading. An investor with a margin account should be aware that executing 4 or more day-trades in a 5-business day window will mark them as a Pattern Day Trader. An investor with a cash account should be aware that day-trading with unsettled funds will incur a Good Faith Violation.

Corporate Actions

In the event of a stock split, you may receive fractional shares of a security, depending on the terms and conditions of the split.

In some cases, a stock split that creates fractional shares will occur on a symbol that is not enabled for fractional trading. To liquidate a position like this, reach out to our team at support@webull.us

*Engaging in fractional share trading poses unique risks and limitations. Fractional share positions are not transferable and may be illiquid outside of Webull. Not all assets on Webull are eligible for fractional share trading. For additional detail on fractional shares visit webull.com/fractional-shares.